Featured: Distributed Grids and the Future Role of Utilities

Despite the rapid adoption of renewable energy around the world, with two-thirds of all new energy investment going to technologies such as solar and wind, the process of decarbonising electricity grids is not as straightforward as some figures imply. In addition to replacing old power generation or adding to the existing supply, grid operators will have to take up the role of providing energy for both the heating and transport market in the years to come. In the EU, heating and cooling constitutes 50% of all energy demand, together with 32% for transport. The power sector in the EU has committed to a massive 80-95% reduction in emissions by 2050, and will also have to take up additional demand from the transport sector which could increase the load demand by 50%. Given that decarbonising electricity generation is the most straightforward way of reducing overall emissions, it is not difficult to see why governments are focusing on reducing emissions here, but the difficulties involved in doing so may be harder to quantify.

The fundamental change occurring in utilities provision is the onset of distributed energy resources (DERs) which will profoundly affect the landscape of electricity generation and transmission using a wide range of technologies. These technologies don’t end with familiar categories such as solar PV, wind and biomass, but now include medium-scale storage integration, smart systems design for industry applications, smart-metering, net-metering, home energy storage with two-way charging and grid-integrated EVs. Presenting numerous challenges for traditional utility companies as well as many benefits is expediting the widespread adoption of a variety of low-carbon energy sources by the end-user. The problem in effect comes down to implementation – depending on the business model employed by the utility, the industry can go in two different ways. One way means that dips in supply are met with a range of technologies to balance the demand and reduce pressure on operators; making the most efficient use of the grid and its inputs as a whole. The other way sees an industry that is divided by the need to subsidise an expensive infrastructure with a diminishing return on this outgoing as customers increasingly opt to source their supply from third-party operators and private companies, and skip the cost of legacy infrastructure altogether.

Many technologies currently exist or are in development in order to engage with these approaching difficulties. In Europe initiatives to test and assess the integration of distributed grids have been ongoing since 2011, with a similar systems-level approach affecting change in states such as California, Texas and New York. Overall, its understood that to fully utilise these technologies, a complete picture of the grid needs to be realised, and this information needs to be shared between utility companies and new classifications of actors in the market such as distributed systems operators and third parties representing aggregated DER providers.

There is much positive spin put on this transition period for utilities, as expressed by PA Consulting in its new DynamicEnergy white paper. Here is some of the market-speak; we shall wait and see how whether these aspirations materialise:

A Dynamic and Bidirectional Grid: The next-generation grid will be far more distributed and leverage smart sensors, switching systems, field analytic devices, and network adapters — all empowered by advanced software and communication networks to manage and enable two-way energy flow.

Real-Time Customer Engagement: Enable customers to interact with an online hub that provides easy access to new services, billing information, rate choice, supply choice from the utility or third parties, as well as other community energy programs.

Virtual Grid Architecture: The overall grid architecture will be increasingly digital as more applications and data moves to the cloud. This enables a virtual architecture where applications, data, real-time communications and infrastructure are acquired and configured in an “app store” model.

That this evolution is necessary is implicit to the debate regarding renewable energy uptake, with much of the necessary technology in the process of implementation only in some regions, and much progress to be made. However, as opportunities are presented, so are the difficulties. Intrinsically, utilities are faced with increasing levels of complexity, but a few facts have been asserted throughout this process – such as solar with storage becoming cheaper than traditional forms of energy demand-response systems.

Ultimately, utilities risk being made completely redundant by these threats, and will have to embrace the imperative of using all available technological options – essentially being able to temper supply and demand to enable optimum efficiency at all times. This may seem like an impossible aspiration but if (when) achieved, the positive financial and environmental benefits will be lasting and profound – a seismic shift in the way we view and use energy.

As an optimistic example of the future, here is an overview of New York Power Authorities ‘Digital Foundry’

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